In the midst of one of the most uncertain real estate markets in history, it’s more important than ever to be informed. In a continuing series, we take a look at some of the most pressing questions about mortgages, refinancing, home equity, and other real estate options available to you.
(8/23/2012) Continuing news from the real estate market points to an optimal time to purchase, with the combination of low interest rates and low home prices making homes more affordable than ever. This affordability also extends to buying a property as an investment.
Real estate was billed as a get-rich quick investment in the heady days before the market collapse. Today, it’s a different market. But rewards can still exist for investing buyers.
When considering investing in real estate, there are several options. Buyers can purchase a property and then rent it out, serving as a landlord. Buyers can purchase a property to restore and then resell at a profit, an option increasingly popular as foreclosures have increased. Buyers can also look to commercial real estate and land development.
Buying an investment property can get tricky. Experts recommend a few key tips to remember before, during and after purchase:
Partner with experts. When investing for the first time, it’s a smart option. That means working with an experienced real estate broker in investment properties, and/or partnering with an experience investor who can provide guidance.
Find the right location for your purpose. If you’re looking to rent, for example, homes in highly populated areas are a better bet to ensure a large pool of potential renters. Also, a location close to amenities like public transportation and good schools, and in low-crime districts, are attractive to renters and future buyers.
Plan for ups and downs. Even if you find a renter right away, there is a good chance that vacancies will exist at some point. You’ll be responsible for all payments. Plus, if any repairs are needed, you as landlord are responsible. Planning on reselling after fixing it up? That may take longer than expected, and will require funds to support.
Think through all the responsibilities that will be required. Think it’s just collecting checks every month? There’s much more involved. Budget every cost, and plan for more than your budget for improvements, unforeseen repairs, and more.
Think through an exit strategy. How long do you plan to hold onto this property? Knowing where you are and where you’re going will help ensure the most value.
Watch for rules and regulations. From federal fair housing regulations to laws that govern lead paint disclosure, the number of rules for homes are many, and the fines for noncompliance are large. It’s essential to keep on top of zoning laws, federal regulations, and local statutes to ensure no unexpected fees and punishments.